Chile and Peru

Neighbours, but not yet friends

A wary rapprochement

TRADE between their countries was thriving even before the governments of Chile and Peru signed a free-trade agreement last year with an eye to boosting their combined exports to Asia. Chilean firms run Peru's main airline, department stores and chain of chemists. Peruvian chefs run some of the best restaurants in Chile's capital, Santiago. In many ways, these two neighbours are drawing closer. But the past continues to haunt them.

In a war in the late 19th century, Chile defeated Bolivia and its ally, Peru, seizing from them what is today its copper-rich northern territory. Bolivia continues to clamour for its lost outlet to the sea. Apart from a minor quibble over the land border, Peru makes no such claim. But it does dispute its southern maritime boundary.

Chile argues that this was fixed as running due west by treaty in the 1950s. These were just fishing agreements, retorts Peru. It takes the land border's final seaward stretch, which runs in a south-westerly direction as fixed by an earlier treaty, and projects this into the Pacific. Between these two lines lies a large, fish-rich triangle.

In tackling this issue, both governments must deal with national pride and jingoistic media. Peru's previous president, Alejandro Toledo, sometimes yielded to such pressures. Alan García, his successor, has so far largely resisted them.

That is not always easy. In April Ollanta Humala, a nationalist former army officer who lost to Mr García in a presidential election last year, announced that he would lead a protest march to the border. Police halted the march well inside Peruvian territory. Mr García responded by saying that he proposed to ask the International Court of Justice in The Hague to rule on the maritime border.

Chile protested, but officials in Santiago privately welcome the move. The court will take years to rule, and the referral may draw some of the political sting from the issue. There are other signs of goodwill. In March poets from both countries held a reading aboard a captured Peruvian battleship moored as a museum in a Chilean port. Chile's government says it is awaiting a suitable moment to return part of Peru's national library, seized in the war.

In public, Mr García and Chile's president, Michelle Bachelet, have been ostentatiously friendly. But progress on an agenda of confidence-building measures drawn up last year has been patchy. Chile complains that Peru has yet to implement an agreement to standardise accounts of military spending. Relations could be upset if Chile's Supreme Court throws out Peru's request to extradite Alberto Fujimori, a former president who faces corruption and human-rights charges.

Paradoxically, the thorniest outstanding issue involves Bolivia. Ms Bachelet has been friendly to its president, Evo Morales. In theory, a grand bargain beckons in which energy-short Chile would grant Bolivia use of a port and transport corridor in return for access to its large reserves of natural gas. The problem is that the most practical option for such a corridor would be in former Peruvian territory. And that is something Peruvian governments have found hard to swallow.

In the 1970s, when both Peru and Chile were ruled by military governments, they came close to war. That now seems unthinkable. They are no longer enemies. But it may take another generation before they become friends.